Document:

Exhibit 4.29 

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

    	 

    

 

 

    	 

     

    

 

IN WITNESS WHEREOF, each of the Purchaser,
the Sellers, the Company and the Founders has duly executed, or has caused to be duly executed by their respective officers thereunto
duly authorized, this Agreement as of the date first written above.

 

	 	“Purchaser”	 
	 	 	 
	 	TAL EDUCATION GROUP	 
	 	 	 	 
	 	By:	/s/YANG Qiang	 
	 	Name:	 	 
	 	Title:	Authorized Signatory	 

 

     

     

    

 

IN WITNESS WHEREOF, each of the Purchaser,
the Sellers, the Company and the Founders has duly executed, or has caused to be duly executed by their respective officers thereunto
duly authorized, this Agreement as of the date first written above.

 

	 	“SELLERS”	 
	 	 	 
	 	CHENG WAI	 
	 	 	 	 
	 	By:	/s/Cheng Wai	 
	 	Name:	Cheng Wai	 
	 	 	 	 
	 	SPLENDOR BOUND LIMITED	 
	 	 	 	 
	 	By:	/s/Zhang Hui	 
	 	Name:	Zhang Hui	 
	 	Title:	Authorized Signatory	 
	 	 	 	 
	 	TALENT JOURNEY LIMITED	 
	 	 	 	 
	 	By:	/s/Bai Yun	 
	 	Name:	Bai Yun	 
	 	Title:	Authorized Signatory	 
	 	 	 	 
	 	CONSTANT SUCCESS INVESTMENTS LIMITED	 
	 	 	 	 
	 	By:	/s/Cao Wei	 
	 	Name:	Cao Wei	 
	 	Title:	Authorized Signatory	 

 

     

     

    

 

IN WITNESS WHEREOF, each of the Purchaser,
the Sellers, the Company and the Founders has duly executed, or has caused to be duly executed by their respective officers thereunto
duly authorized, this Agreement as of the date first written above.

 

	 	“SELLERS”	 
	 	 	 
	 	LION HIGH INVESTMENTS LIMITED	 
	 	 	 	 
	 	By:	/s/Ding Lingfang	 
	 	Name:	Ding Lingfang	 
	 	Title:	Authorized Signatory	 
	 	 	 	 
	 	AGNITA INVESTMENTS LIMITED	 
	 	 	 	 
	 	By:	/s/Wu Ying	 
	 	Name:	Wu Ying	 
	 	Title:	Authorized Signatory	 

 

     

     

    

 

IN WITNESS WHEREOF, each of the Purchaser,
the Sellers, the Company and the Founders has duly executed, or has caused to be duly executed by their respective officers thereunto
duly authorized, this Agreement as of the date first written above.

 

	 	“SELLERS”	 
	 	 	 
	 	CUPITO HOLDINGS LIMITED	 
	 	 	 	 
	 	By:	/s/Zhang Yu	 
	 	Name:	Zhang Yu	 
	 	Title:	Authorized Signatory	 
	 	 	 	 
	 	YU Yang	 
	 	 	 	 
	 	By:	/s/Yu Yang	 
	 	Name:	Yu Yang	 
	 	 	 	 
	 	NEW GENIOUS GLOBAL LIMITED	 
	 	 	 	 
	 	By:	/s/Ni Fanli	 
	 	Name:	Ni Fanli	 
	 	Title:	Authorized Signatory	 

 

     

     

    

 

IN WITNESS WHEREOF, each of the Purchaser,
the Sellers, the Company and the Founders has duly executed, or has caused to be duly executed by their respective officers thereunto
duly authorized, this Agreement as of the date first written above.

 

	 	“SELLERS”	 
	 	 	 
	 	ACE FRONTIER DEVELOPMENTS LIMITED	 
	 	 	 	 
	 	By:	/s/Chi Mei	 
	 	Name:	Chi Mei	 
	 	Title:	Authorized Signatory	 
	 	 	 	 
	 	BERTRAM HOLDINGS LIMITED	 
	 	 	 	 
	 	By:	/s/Zhang Liang	 
	 	Name:	Zhang Liang	 
	 	Title:	Authorized Signatory	 
	 	 	 	 
	 	DRAGON YEAR INVESTMENTS LIMITED	 
	 	 	 	 
	 	By:	/s/Wang Yu	 
	 	Name:	Wang Yu	 
	 	Title:	Authorized Signatory	 
	 	 	 	 
	 	GREAT TIME DEVELOPMENTS LIMITED	 
	 	 	 	 
	 	By:	/s/Wang Hao	 
	 	Name:	Wang Hao	 
	 	Title:	Authorized SignatoryExhibit 10.1

 

LOAN AND SECURITY
AGREEMENT

 

THIS LOAN AND SECURITY
AGREEMENT (this “Agreement”) dated as of May 25, 2016 (the “Effective Date”) between
(i) SILICON VALLEY BANK, a California corporation (“Bank”), and (ii) XTANT MEDICAL HOLDINGS, INC.,
a Delaware corporation (“Holdings”), BACTERIN INTERNATIONAL, INC., a Nevada corporation (“Bacterin”),
X-SPINE SYSTEMS, INC., an Ohio corporation (“X-spine”), and XTANT MEDICAL, INC., a Delaware corporation
(“Xtant”, and together with Holdings, Bacterin and X-spine, individually and collectively, jointly and severally,
the “Borrower”), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The
parties agree as follows:

 

1             ACCOUNTING
AND OTHER TERMS

 

Accounting terms not defined
in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Capitalized terms
not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in this
Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.

 

2             LOAN
AND TERMS OF PAYMENT

 

2.1           Promise
to Pay. Borrower hereby, individually and collectively, jointly and severally, unconditionally promises to pay Bank the outstanding
principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement.

 

2.2           Revolving
Advances.

 

(a)          Availability.
Subject to the terms and conditions of this Agreement and to deduction of Reserves, Bank shall make Advances not exceeding the
Availability Amount. Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Line Maturity Date, reborrowed,
subject to the applicable terms and conditions precedent herein.

 

(b)          Termination;
Repayment. The Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all Advances, the
unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable.

 

2.3           Overadvances.
If, at any time, the outstanding principal amount of any Advances exceeds the lesser of either the Revolving Line or the Borrowing
Base, Borrower shall immediately pay to Bank in cash the amount of such excess (such excess, the “Overadvance”).
Without limiting Borrower’s obligation to repay Bank any Overadvance, Borrower agrees to pay Bank interest on the outstanding
amount of any Overadvance, on demand, at the Default Rate.

 

2.4           Payment
of Interest on the Credit Extensions.

 

(a)          Advances.
Subject to Section 2.4(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum
rate equal to the Prime Rate plus one percent (1.00%); provided, that during a Streamline Period, the principal amount
outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate plus one-quarter
of one percent (0.25%), which interest shall in any event be payable monthly in accordance with Section 2.4(d) below.

 

(b)          Default
Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at
a rate per annum which is three percentage points (3.00%) above the rate that is otherwise applicable thereto (the “Default
Rate”). Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, without
limitation, Bank Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable
to the Obligations. Payment or acceptance of the increased interest rate provided in this Section 2.4(b) is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights
or remedies of Bank.

 

     

     

    

 

(c)          Adjustment
to Interest Rate. Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be effective
on the effective date of any change to the Prime Rate and to the extent of any such change.

 

(d)          Payment;
Interest Computation. Interest is payable monthly on the last calendar day of each month and shall be computed on the basis
of a 360-day year for the actual number of days elapsed. In computing interest, (i) all payments received after 12:00 p.m.
Pacific time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the date of
the making of any Credit Extension shall be included and the date of payment shall be excluded; provided, however,
that if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on
such Credit Extension.

 

2.5           Fees.
Borrower shall pay to Bank:

 

(a)          Commitment
Fee. A fully earned (as of the Effective Date), non-refundable commitment fee of One Hundred Eight Thousand Dollars ($108,000.00),
payable as follows: (i) Thirty Six Thousand Dollars ($36,000.00) shall be due and payable on the Effective Date; (ii) Thirty Six
Thousand Dollars ($36,000.00), shall be due and payable on the First Anniversary; provided, that in the event that
all outstanding Obligations under the Revolving Line are repaid in full and the Bank’s commitment to make any further Credit
Extensions under the Revolving Line is terminated prior to the First Anniversary, Seventy Two Thousand Dollars ($72,000.00), shall
be immediately due and payable at the time of such repayment and termination; (iii) Thirty Six Thousand Dollars ($36,000.00), shall
be due and payable on the Second Anniversary; provided, that in the event that all outstanding Obligations under
the Revolving Line are repaid in full and the Bank’s commitment to make any further Credit Extensions under the Revolving
Line is terminated after the First Anniversary but prior to the Second Anniversary, Thirty Six Thousand Dollars ($36,000.00), shall
be immediately due and payable at the time of such repayment and termination;

 

(b)          Termination
Fee. Upon termination of this Agreement for any reason prior to the Revolving Line Maturity Date, in addition to the payment
of any other amounts then-owing, a termination fee in an amount equal to (i) three percent (3.00%) of the Revolving Line (i.e.
One Hundred Eighty Thousand Dollars ($180,000.00)), if such termination occurs on or prior to the First Anniversary; (ii) two percent
(2.00%) of the Revolving Line (i.e. One Hundred Twenty Thousand Dollars ($120,000.00)), if such termination occurs after the First
Anniversary but on or prior to the Second Anniversary; and (iii) one percent (1.00%) of the Revolving Line (i.e. Sixty Thousand
Dollars ($60,000.00)), if such termination occurs after the Second Anniversary but prior to the Revolving Line Maturity Date; provided
that no termination fee shall be charged if the credit facility hereunder is replaced with a new facility from Bank; and

 

(c)          Bank
Expenses. All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of this
Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Bank).

 

(d)          Fees
Fully Earned. Unless otherwise provided in this Agreement or in a separate writing by Bank, Borrower shall not be entitled
to any credit, rebate, or repayment of any fees earned by Bank pursuant to this Agreement notwithstanding any termination of this
Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder. Bank may deduct amounts
owing by Borrower under the clauses of this Section 2.5 pursuant to the terms of Section 2.6(c). Bank shall provide Borrower written
notice of deductions made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.5.

 

2.6           Payments;
Application of Payments; Debit of Accounts. 

 

(a)          All
payments to be made by Borrower under any Loan Document shall be made in immediately available funds in Dollars, without setoff
or counterclaim, before 12:00 noon Pacific time on the date when due. Payments of principal and/or interest received after 12:00
noon Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a day that
is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue
to accrue until paid.

 

    	 	-2-	 

     

    

 

(b)          Bank
has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may be applied.
Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments required to
be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application is not specified
elsewhere in this Agreement.

 

(c)          Bank
may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interest payments
or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off.

 

3            CONDITIONS
OF LOANS

 

3.1           Conditions
Precedent to Initial Credit Extension. Bank’s obligation to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate, including, without limitation:

 

(a)          duly
executed signatures to the Loan Documents;

 

(b)          duly
executed signatures to the Control Agreements, if any;

 

(c)          the
Operating Documents and long-form good standing certificates of Borrower certified by the Secretary of State (or equivalent agency)
of Borrower’s jurisdiction of organization or formation and each jurisdiction in which Borrower is qualified to conduct business,
each as of a date no earlier than thirty (30) days prior to the Effective Date;

 

(d)          duly
executed signatures to the completed Borrowing Resolutions for Borrower;

 

(e)          (i)
duly executed signatures to the completed OrbiMed Intercreditor Agreement, and (ii) fully executed copies of the OrbiMed Loan Documents;

 

(f)          certified
copies, dated as of a recent date, of financing statement searches, as Bank may request, accompanied by written evidence (including
any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or
have been or, in connection with the initial Credit Extension, will be terminated or released;

 

(g)          the
Perfection Certificate of Borrower, together with the duly executed signature thereto;

 

(h)          a
landlord’s consent in favor of Bank for (i) 600 Cruiser Lane, Belgrade, Montana 59714; (ii) 664 Cruiser Lane, Belgrade, Montana
59714; (iii) 732 Cruiser Lane, Belgrade, Montana 59714; and (iv) 452 Alexandersville Road, Miamisburg, Ohio 45342, by each respective
landlord thereof, together with the duly executed signatures thereto;

 

(i)          a
bailee’s waiver in favor of Bank for each location where Borrower maintains property with a third party, by each such third
party, as required by Bank, together with the duly executed signatures thereto;

 

(j)          legal
opinions of Borrower’s counsel dated as of the Effective Date together with the duly executed signature thereto;

 

(k)          evidence
satisfactory to Bank that the insurance policies and endorsements required by Section 6.7 hereof are in full force and effect,
together with appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Bank;

 

(l)          the
completion of the Initial Audit with results satisfactory to Bank in its sole and absolute discretion;

 

    	 	-3-	 

     

    

 

(m)          Borrower’s
consolidated minimum revenue, determined in accordance with GAAP, for the quarterly period ended March 31, 2016, is equal to or
greater than Eighteen Million Dollars ($18,000,000.00); and

 

(n)          payment
of the fees and Bank Expenses then due as specified in Section 2.6 hereof.

 

3.2           Conditions
Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including the initial Credit Extension,
is subject to the following conditions precedent:

 

(a)          timely
receipt of an executed Transaction Report;

 

(b)          the
representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of
the Transaction Report and on the Funding Date of each Credit Extension; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in
the text thereof; and provided, further that those representations and warranties expressly referring to a specific
date shall be true, accurate and complete in all material respects as of such date, and no Default or Event of Default shall have
occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty
on that date that the representations and warranties in this Agreement remain true, accurate, and complete in all material respects;
provided, however, that such materiality qualifier shall not be applicable to any representations and warranties
that already are qualified or modified by materiality in the text thereof; and provided, further that those representations
and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such
date; and

 

(c)          Bank
determines to its satisfaction that there has not been any material impairment in the general affairs, management, results of operation,
financial condition or the prospect of repayment of the Obligations, or any material adverse deviation by Borrower from the most
recent business plan of Borrower presented to and accepted by Bank.

 

3.3           Covenant
to Deliver. Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition
precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any such
item shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit Extension
in the absence of a required item shall be in Bank’s sole discretion.

 

3.4           Procedures
for Borrowing. Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in
this Agreement, to obtain an Advance, Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail by 12:00
noon Pacific time on the Funding Date of the Advance. In connection with such notification, Borrower must promptly deliver to Bank
by electronic mail a completed Transaction Report executed by an Authorized Signer together with such other reports and information,
including without limitation, sales journals, cash receipts journals, accounts receivable aging reports, as Bank may request in
its sole discretion. Bank shall credit proceeds of an Advance to the Designated Deposit Account. Bank may make Advances under this
Agreement based on instructions from an Authorized Signer or without instructions if the Advances are necessary to meet Obligations
which have become due.

 

4           CREATION
OF SECURITY INTEREST

 

4.1           Grant
of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations,
a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired
or arising, and all proceeds and products thereof.

 

Borrower acknowledges that
it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless of the terms of
any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations hereunder
and that it is the intent of Borrower and Bank to have all such Obligations secured by the first priority perfected security interest
in the Collateral granted herein (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to
have superior priority to Bank’s Lien in this Agreement).

 

    	 	-4-	 

     

    

 

If this Agreement is terminated,
Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid
in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as
Bank’s obligation to make Credit Extensions has terminated, Bank shall, at the sole cost and expense of Borrower, release
its Liens in the Collateral and all rights therein shall revert to Borrower. In the event (x) all Obligations (other than inchoate
indemnity obligations), except for Bank Services, are satisfied in full, and (y) this Agreement is terminated, Bank shall terminate
the security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its good faith business judgment
for Bank Services, if any. In the event such Bank Services consist of outstanding Letters of Credit, Borrower shall provide to
Bank cash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then at least one hundred
five percent (105.0%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then at least one hundred ten percent
(110.0%), of the Dollar Equivalent of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to
become due in connection therewith (as estimated by Bank in its business judgment), to secure all of the Obligations relating to
such Letters of Credit.

 

4.2           Priority
of Security Interest. Borrower represents, warrants, and covenants that the security interest granted herein is and shall at
all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that are
permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien under this Agreement). If Borrower
shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general details
thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement,
with such writing to be in form and substance reasonably satisfactory to Bank.

 

4.3           Authorization
to File Financing Statements. Borrower hereby authorizes Bank to file financing statements, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition
of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code. Such financing
statements may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being of an
equal or lesser scope, or with greater detail, all in Bank’s discretion.

 

5           REPRESENTATIONS
AND WARRANTIES

 

Borrower represents and
warrants as follows:

 

5.1           Due
Organization, Authorization; Power and Authority. Borrower is duly existing and in good standing as a Registered Organization
in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which
the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could
not reasonably be expected to have a material adverse effect on Borrower’s business. In connection with this Agreement, Borrower
has delivered to Bank a completed certificate signed by Borrower, entitled “Perfection Certificate”. Borrower represents
and warrants to Bank that (a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature
page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection
Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s organizational identification number or accurately
states that Borrower has none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if
more than one, its chief executive office as well as Borrower’s mailing address (if different than its chief executive office);
(e) Borrower (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational
structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection
Certificate pertaining to Borrower and each of its Subsidiaries, if any, is accurate and complete (it being understood and agreed
that Borrower may from time to time update certain information in the Perfection Certificate after the Effective Date to the extent
permitted by one or more specific provisions in this Agreement). If Borrower is not now a Registered Organization but later becomes
one, Borrower shall promptly notify Bank of such occurrence and provide Bank with Borrower’s organizational identification
number.

 

    	 	-5-	 

     

    

 

The execution, delivery
and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with
any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any
material Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets
may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval
from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and
effect), or (v) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or
acceleration of, any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which it
is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on Borrower’s
business.

 

5.2           Collateral.
Borrower has good title to, rights in, and the power to transfer each item of the Collateral upon which it purports to grant a
Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no Collateral Accounts at or with any
bank or financial institution other than Bank or Bank’s Affiliates except for the Collateral Accounts described in the Perfection
Certificate delivered to Bank in connection herewith and which Borrower has taken such actions as are necessary to give Bank a
perfected security interest therein, pursuant to the term of Section 6.8(b). The Accounts are bona fide, existing obligations of
the Account Debtors.

 

The Collateral is not in
the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate. None
of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as
permitted pursuant to Section 7.2.

 

All Inventory is in all
material respects of good and marketable quality, free from material defects.

 

Borrower is the sole owner
of the Intellectual Property which it owns or purports to own except for (a) non-exclusive licenses granted to its customers in
the ordinary course of business, (b) over-the-counter software that is commercially available to the public, and (c) material Intellectual
Property licensed to Borrower and noted on the Perfection Certificate. Each Patent which it owns or purports to own and which is
material to Borrower’s business is valid and enforceable, and no part of the Intellectual Property which Borrower owns or
purports to own and which is material to Borrower’s business has been judged invalid or unenforceable, in whole or in part.
To the best of Borrower’s knowledge, no claim has been made that any part of the Intellectual Property violates the rights
of any third party except to the extent such claim would not reasonably be expected to have a material adverse effect on Borrower’s
business.

 

Except as noted on the
Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted License.

 

5.3           Accounts
Receivable. 

 

(a)          For
each Account with respect to which Advances are requested, on the date each Advance is requested and made, such Account shall be
an Eligible Account.

 

(b)          All
statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Eligible Accounts
are and shall be true and correct and all such invoices, instruments and other documents, and all of Borrower's Books are genuine
and in all respects what they purport to be. All sales and other transactions underlying or giving rise to each Eligible Account
shall comply in all material respects with all applicable laws and governmental rules and regulations. Borrower has no knowledge
of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts in any Transaction Report.
To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments, and agreements relating
to all Eligible Accounts are genuine, and all such documents, instruments and agreements are legally enforceable in accordance
with their terms.

 

    	 	-6-	 

     

    

 

5.4           Litigation.
Other than as disclosed on the Perfection Certificate, there are no actions or proceedings pending or, to the knowledge of any
Responsible Officer, threatened in writing by or against Borrower or any of its Subsidiaries involving more than, individually
or in the aggregate, Two Hundred Fifty Thousand Dollars ($250,000.00).

 

5.5           Financial
Statements; Financial Condition. All consolidated financial statements for Borrower and any of its Subsidiaries delivered to
Bank fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated
results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition since
the date of the most recent financial statements submitted to Bank.

 

5.6           Solvency.
The fair salable value of Borrower’s consolidated assets (including goodwill minus disposition costs) exceeds the fair value
of Borrower’s liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement;
and Borrower is able to pay its debts (including trade debts) as they mature.

 

5.7           Regulatory
Compliance. Borrower is not an “investment company” or a company “controlled” by an “investment
company” under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of its important activities
in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Borrower (a) has
complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements of Law the violation
of which could reasonably be expected to have a material adverse effect on its business. None of Borrower’s or any of its
Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge,
by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower
and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with,
and given all notices to, all Government Authorities that are necessary to continue their respective businesses as currently conducted.

 

5.8           Subsidiaries;
Investments. Borrower does not own any stock, partnership, or other ownership interest or other equity securities except for
Permitted Investments.

 

5.9           Tax
Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports, and Borrower has
timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except to the
extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so
long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made
therefor.

 

To the extent Borrower
defers payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and any material
development in, the proceedings, and (ii) post bonds or take any other steps required to prevent the governmental authority levying
such contested taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien.” Borrower
is unaware of any claims or adjustments proposed for any of Borrower's prior tax years which could result in additional taxes becoming
due and payable by Borrower. Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete
termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected
to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or
any other governmental agency.

 

5.10         Use
of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as working capital and to fund its general business
requirements and not for personal, family, household or agricultural purposes.

 

5.11         Full
Disclosure. No written representation, warranty or other statement of Borrower in any certificate or written statement given
to Bank, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates
and written statements given to Bank, contains any untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections
and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual
results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

 

    	 	-7-	 

     

    

 

5.12         Definition
of “Knowledge.” For purposes of the Loan Documents, whenever a representation or warranty is made to Borrower’s
knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or
awareness means the actual knowledge, after reasonable investigation, of any Responsible Officer.

 

6            AFFIRMATIVE
COVENANTS

 

Borrower shall do all of
the following:

 

6.1           Government
Compliance.

 

(a)          Maintain
its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect
on Borrower’s business or operations. Borrower shall comply, and have each Subsidiary comply, in all material respects, with
all laws, ordinances and regulations to which it is subject.

 

(b)          Obtain
all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which
it is a party and the grant of a security interest to Bank in all of its property. Borrower shall promptly provide copies of any
such obtained Governmental Approvals to Bank.

 

6.2           Financial
Statements, Reports, Certificates. Provide Bank with the following:

 

(a)          Transaction
Reports. A Transaction Report (and any schedules related thereto) (i) with each request for an Advance, (ii) on the 15th
(or the immediately preceding Business Day if the 15th is not a Business Day) and the last Business Day of each
month when a Streamline Period is not in effect, and (iii) within thirty (30) days after the end of each month when a Streamline
Period is in effect;

 

(b)          AR/AP
Agings. Within thirty (30) days after the end of each month, (A) monthly accounts receivable agings, aged by invoice date,
(B) monthly accounts payable agings, aged by invoice date, and outstanding or held check registers, if any, and (C) monthly reconciliations
of accounts receivable agings (aged by invoice date), transaction reports, Deferred Revenue report, and general ledger;

 

(c)          Monthly
Financial Statements. As soon as available, but no later than thirty (30) days after the last day of each month, a company
prepared consolidated and consolidating balance sheet, Statement of cash flows and income statement covering Borrower’s consolidated
operations for such month certified by a Responsible Officer and in a form acceptable to Bank (the “Monthly Financial
Statements”);

 

(d)          Compliance
Certificate. Within thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a
duly completed Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such month, Borrower was
in full compliance with all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with
the financial covenants set forth in this Agreement and such other information as Bank may reasonably request, including, without
limitation, a statement that at the end of such month there were no held checks;

 

(e)          Projections.
Within thirty (30) days after board approval, but in any event on or before January 31 of each calendar year, and as amended/updated,
(A) annual operating budgets (including income statements, balance sheets and cash flow statements, by month) for the upcoming
fiscal year of Borrower, and (B) annual financial projections for the following fiscal year (on a quarterly basis) as approved
by Borrower’s board of directors, together with any related business forecasts used in the preparation of such annual financial
projections;

 

    	 	-8-	 

     

    

 

(f)          Annual
Audited Financial Statements. As soon as available, and in any event within 180 days following the end of Borrower’s
fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified
opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank;

 

(g)          SEC
Reporting. Within five (5) days of filing, copies of all periodic and other reports, proxy statements and other materials filed
by Borrower with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any national
securities exchange, or distributed to its shareholders, as the case may be. Documents required to be delivered pursuant to the
terms hereof (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically
and if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link
thereto, on Borrower’s website on the Internet at Borrower’s website address; provided, however, Borrower
shall promptly notify Bank in writing (which may be by electronic mail) of the posting of any such documents;

 

(h)          Other
Reports. Within five (5) days of delivery, copies of all statements, reports and notices made available to Borrower’s
security holders or to any holders of Subordinated Debt;

 

(i)          Litigation
Reports. Prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that
could result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, Two Hundred Fifty
Thousand Dollars ($250,000.00) or more; and

 

(j)          Other
Financial Information. Other financial information reasonably requested by Bank.

 

6.3           Accounts
Receivable.

 

(a)          Schedules
and Documents Relating to Accounts.  Borrower shall deliver to Bank transaction reports and schedules of collections,
as provided in Section 6.2, on Bank’s standard forms; provided, however, that Borrower’s failure to execute
and deliver the same shall not affect or limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall
Bank’s failure to advance or lend against a specific Account affect or limit Bank’s Lien and other rights therein.
If requested by Bank, Borrower shall furnish Bank with copies (or, at Bank’s request, originals) of all contracts, orders,
invoices, and other similar documents, and all shipping instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such Accounts. In addition, Borrower shall deliver to Bank,
on its request, the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property
evidencing or securing any Accounts, in the same form as received, with all necessary indorsements, and copies of all credit memos.

 

(b)          Disputes.
Borrower shall promptly notify Bank of all disputes or claims relating to Accounts. Borrower may forgive (completely or partially),
compromise, or settle any Account for less than payment in full, or agree to do any of the foregoing so long as (i) Borrower
does so in good faith, in a commercially reasonable manner, in the ordinary course of business, in arm’s-length transactions,
and reports the same to Bank in the regular reports provided to Bank; (ii) no Default or Event of Default has occurred and
is continuing; and (iii) after taking into account all such discounts, settlements and forgiveness, the total outstanding
Advances will not exceed the lesser of the Revolving Line or the Borrowing Base.

 

(c)          Collection
of Accounts. Borrower shall have the right to collect all Accounts, unless and until a Default or an Event of Default has occurred
and is continuing. Bank shall require that Borrower direct Account Debtors to deliver or transmit all proceeds of Accounts into
a lockbox account, or such other “blocked account” as specified by Bank (either such account, the “Cash Collateral
Account”). Whether or not an Event of Default has occurred and is continuing, Borrower shall immediately deliver all
payments on and proceeds of Accounts to the Cash Collateral Account to be applied to immediately reduce the Obligations; provided,
that during a Streamline Period, such payments and proceeds shall be transferred to an account of Borrower maintained at
Bank.

 

    	 	-9-	 

     

    

 

(d)          Returns.
Provided no Event of Default has occurred and is continuing, if any Account Debtor returns any Inventory to Borrower, Borrower
shall promptly (i) determine the reason for such return, (ii) issue a credit memorandum to the Account Debtor in the
appropriate amount, and (iii) provide a copy of such credit memorandum to Bank, upon request from Bank. In the event any attempted
return occurs after the occurrence and during the continuance of any Event of Default, Borrower shall hold the returned Inventory
in trust for Bank, and immediately notify Bank of the return of the Inventory.

 

(e)          Verification.
Bank may, from time to time, verify directly with the respective Account Debtors the validity, amount and other matters relating
to the Accounts, either in the name of Borrower or Bank or such other name as Bank may choose, and notify any Account Debtor of
Bank’s security interest in such Account.

 

(f)          No
Liability. Bank shall not be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction
of, any goods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any
kind occurring in the settlement, failure to settle, collection or failure to collect any Account, or for settling any Account
in good faith for less than the full amount thereof, nor shall Bank be deemed to be responsible for any of Borrower's obligations
under any contract or agreement giving rise to an Account. Nothing herein shall, however, relieve Bank from liability for its own
gross negligence or willful misconduct.

 

6.4           Remittance
of Proceeds. Except as otherwise provided in Section 6.3(c), deliver, in kind, all proceeds arising from the disposition of
any Collateral to Bank in the original form in which received by Borrower not later than the following Business Day after receipt
by Borrower, to be applied to the Obligations (a) prior to an Event of Default, pursuant to the terms of Section 2.5(b) hereof,
and (b) after the occurrence and during the continuance of an Event of Default, pursuant to the terms of Section 9.4 hereof; provided
that, if no Event of Default has occurred and is continuing, Borrower shall not be obligated to remit to Bank the proceeds of the
sale of worn out or obsolete Equipment disposed of by Borrower in good faith in an arm’s length transaction for an aggregate
purchase price of Twenty Five Thousand Dollars ($25,000) or less (for all such transactions in any fiscal year). Borrower agrees
that it will not commingle proceeds of Collateral with any of Borrower’s other funds or property, but will hold such proceeds
separate and apart from such other funds and property and in an express trust for Bank. Nothing in this Section limits the restrictions
on disposition of Collateral set forth elsewhere in this Agreement.

 

6.5           Taxes;
Pensions. Timely file, and require each of its Subsidiaries to timely file, all required tax returns and reports and timely
pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and
contributions owed by Borrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the
terms of Section 5.9 hereof, and shall deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay
all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.

 

6.6           Access
to Collateral; Books and Records. In addition to the Initial Audit, at reasonable times, on one (1) Business Day’s notice
(provided no notice is required if an Event of Default has occurred and is continuing), Bank, or its agents, shall have the right
to inspect the Collateral and the right to audit and copy Borrower’s Books. The foregoing inspections and audits (including,
without limitation, the Initial Audit), shall be conducted at Borrower’s expense and no more often than once every twelve
(12) months, or more frequently, as Bank shall determine conditions warrant. The charge therefor shall be $1,000.00 per person
per day (or such higher amount as shall represent Bank’s then-current standard charge for the same), plus reasonable out-of-pocket
expenses. In the event Borrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels or seeks to
or reschedules the audit with less than ten (10) days written notice to Bank, then (without limiting any of Bank’s rights
or remedies) Borrower shall pay Bank a fee of $1,000 plus any out-of-pocket expenses incurred by Bank to compensate Bank for the
anticipated costs and expenses of the cancellation or rescheduling.

 

6.7           Insurance.

 

(a)          Keep
its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry and location
and as Bank may reasonably request. Insurance policies shall be in a form, with financially sound and reputable insurance companies
that are not Affiliates of Borrower, and in amounts that are satisfactory to Bank. All property policies shall have a lender’s
loss payable endorsement showing Bank as an additional loss payee. All liability policies shall show, or have endorsements showing,
Bank as an additional insured. Bank shall be named as lender loss payee and/or additional insured with respect to any such insurance
providing coverage in respect of any Collateral.

 

    	 	-10-	 

     

    

 

(b)          Ensure
that proceeds payable under any property policy are, at Bank’s option, payable to Bank on account of the Obligations.

 

(c)          At
Bank’s request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments. Each
provider of any such insurance required under this Section 6.7 shall agree, by endorsement upon the policy or policies issued by
it or by independent instruments furnished to Bank, that it will give Bank thirty (30) days prior written notice before any
such policy or policies shall be materially altered or canceled. If Borrower fails to obtain insurance as required under this Section 6.7
or to pay any amount or furnish any required proof of payment to third persons and Bank, Bank may make all or part of such payment
or obtain such insurance policies required in this Section 6.7, and take any action under the policies Bank deems prudent.

 

6.8           Operating
Accounts.

 

(a)          Maintain
all of its and all of its Subsidiaries operating and other deposit accounts and securities accounts with Bank and Bank’s
Affiliates; provided that Borrower shall be permitted to transition its existing accounts maintained at financial
institutions other than Bank and Bank’s Affiliates (the “Existing Accounts”), so long as such Existing Accounts
are closed on or before the date that is sixty (60) days after the Effective Date, with all proceeds of such Existing Accounts
transferred to an account of Borrower maintained at Bank.  

 

(b)          Provide
Bank five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution
other than Bank or Bank’s Affiliates. For each Collateral Account that Borrower at any time maintains (other than the Existing
Accounts), Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral
Account is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral
Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement
may not be terminated without the prior written consent of Bank. The provisions of the previous sentence shall not apply to deposit
accounts exclusively used for payroll, payroll taxes, and other employee wage and benefit payments to or for the benefit of Borrower’s
employees and identified to Bank by Borrower as such.

 

6.9           Financial
Covenants.

 

Maintain as of the last
day of each quarterly period listed below, unless otherwise noted, on a consolidated basis with respect to Borrower and its Subsidiaries:

 

(a)          Minimum
Revenue. Achieve Minimum Revenue in an amount equal to or greater than the amount specified below for each quarterly
period indicated below:

 

	Quarterly Period Ending	 	Minimum Revenue	 
	 	 	 	 
	June 30, 2016	 	$	18,000,000.00	 
	 	 	 	 	 
	September 30, 2016, December 31, 2016, March 31, 2017 and June 30, 2017	 	$	20,000,000.00	 
	 	 	 	 	 
	September 30, 2017, and each quarterly period ending thereafter	 	$	22,000,000.00	 

 

    	 	-11-	 

     

    

 

6.10         Protection
and Registration of Intellectual Property Rights.

 

(a)          (i) Protect,
defend and maintain the validity and enforceability of its Intellectual Property; (ii) promptly advise Bank in writing of
material infringements or any other event that could reasonably be expected to materially and adversely affect the value of its
Intellectual Property; and (iii) not allow any Intellectual Property material to Borrower’s business to be abandoned,
forfeited or dedicated to the public without Bank’s written consent.

 

(b)          To
the extent not already disclosed in writing to Bank, if Borrower (i) obtains any Patent, registered Trademark, registered
Copyright, registered mask work, or any pending application for any of the foregoing, whether as owner, licensee or otherwise,
or (ii) applies for any Patent or the registration of any Trademark, then Borrower shall immediately provide written notice
thereof to Bank and shall execute such intellectual property security agreements and other documents and take such other actions
as Bank may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in
favor of Bank in such property. If Borrower decides to register any Copyrights or mask works in the United States Copyright Office,
Borrower shall: (x) provide Bank with at least fifteen (15) days prior written notice of Borrower’s intent to register
such Copyrights or mask works together with a copy of the application it intends to file with the United States Copyright Office
(excluding exhibits thereto); (y) execute an intellectual property security agreement and such other documents and take such
other actions as Bank may request in its good faith business judgment to perfect and maintain a first priority perfected security
interest in favor of Bank in the Copyrights or mask works intended to be registered with the United States Copyright Office; and
(z) record such intellectual property security agreement with the United States Copyright Office contemporaneously with filing
the Copyright or mask work application(s) with the United States Copyright Office. Borrower shall promptly provide to Bank copies
of all applications that it files for Patents or for the registration of Trademarks, Copyrights or mask works, together with evidence
of the recording of the intellectual property security agreement required for Bank to perfect and maintain a first priority perfected
security interest in such property.

 

(c)          Provide
written notice to Bank within ten (10) days of entering or becoming bound by any Restricted License (other than over-the-counter
software that is commercially available to the public). Borrower shall take such steps as Bank requests to obtain the consent of,
or waiver by, any person whose consent or waiver is necessary for (i) any Restricted License to be deemed “Collateral”
and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such
Restricted License, whether now existing or entered into in the future, and (ii) Bank to have the ability in the event of
a liquidation of any Collateral to dispose of such Collateral in accordance with Bank’s rights and remedies under this Agreement
and the other Loan Documents.

 

6.11         Litigation
Cooperation. From the date hereof and continuing through the termination of this Agreement, make available to Bank, without
expense to Bank, Borrower and its officers, employees and agents and Borrower's books and records, to the extent that Bank may
deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Bank with respect
to any Collateral or relating to Borrower.

 

6.12         Formation
or Acquisition of Subsidiaries. Notwithstanding and without limiting the negative covenants contained in Sections 7.3 and 7.7
hereof, at the time that Borrower forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the
Effective Date, Borrower shall, at Banks’ request, in its reasonable discretion, (a) cause such new Subsidiary to provide
to Bank a joinder to this Agreement, together with such appropriate financing statements and/or Control Agreements, all in form
and substance satisfactory to Bank (including being sufficient to grant Bank a first priority Lien (subject to Permitted Liens)
in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Bank appropriate certificates and powers and
financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance
satisfactory to Bank; and (c) provide to Bank all other documentation in form and substance satisfactory to Bank, including
one or more opinions of counsel satisfactory to Bank, which in its opinion is appropriate with respect to the execution and delivery
of the applicable documentation referred to above. Any document, agreement, or instrument executed or issued pursuant to this Section
6.12 shall be a Loan Document.

 

    	 	-12-	 

     

    

 

6.13         Further
Assurances. Execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s
Lien in the Collateral or to effect the purposes of this Agreement. Deliver to Bank, within five (5) days after the same
are sent or received, copies of all correspondence, reports, documents and other filings with any Governmental Authority regarding
compliance with or maintenance of Governmental Approvals or Requirements of Law or that could reasonably be expected to have a
material effect on any of the Governmental Approvals or otherwise on the operations of Borrower or any of its Subsidiaries.

 

6.14         Post-closing
Matters.

 

(a)          On
or before the date that is thirty (30) days after the Effective Date, Borrower shall deliver duly executed original signature
pages to each document described in Section 3.1, as necessary.

 

7           NEGATIVE
COVENANTS

 

Borrower shall not do any
of the following without Bank’s prior written consent:

 

7.1           Dispositions.
Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or permit any of
its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary
course of business; (b) of worn-out or obsolete Equipment that is, in the reasonable judgment of Borrower, no longer economically
practicable to maintain or useful in the ordinary course of business of Borrower; (c) consisting of Permitted Liens and Permitted
Investments; (d) consisting of the sale or issuance of any stock of Borrower permitted under Section 7.2 of this Agreement;
and (e) consisting of Borrower’s use or transfer of money or Cash Equivalents in a manner that is not prohibited by
the terms of this Agreement or the other Loan Documents.

 

7.2           Changes
in Business, Control, or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in any business other
than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate
or dissolve; or (c) fail to provide notice to Bank of any Key Person departing from or ceasing to be employed by Borrower within
five (5) days after such Key Person’s departure from Borrower; or (d) permit or suffer any Change in Control.

 

Borrower shall not, without
at least fifteen (15) days prior written notice to Bank: (1) add any new offices or business locations, including warehouses
(unless such new offices or business locations contain less than Ten Thousand Dollars ($10,000.00) in Borrower’s assets or
property) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Ten Thousand Dollars
($10,000.00) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection Certificate,
(2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or
(5) change any organizational number (if any) assigned by its jurisdiction of organization. If Borrower intends to deliver
any portion of the Collateral valued, individually or in the aggregate, in excess of Ten Thousand Dollars ($10,000.00) to a bailee,
and Bank and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which
Borrower intends to deliver the Collateral, then Borrower will first receive the written consent of Bank, and such bailee shall
execute and deliver a bailee agreement in form and substance satisfactory to Bank.

 

7.3           Mergers
or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or
acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person
(including, without limitation, by the formation of any Subsidiary). A Subsidiary may merge or consolidate into another Subsidiary
or into Borrower.

 

7.4           Indebtedness.
Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.

 

7.5           Encumbrance.
Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the
sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject
to the first priority security interest granted herein, or enter into any agreement, document, instrument or other arrangement
(except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower
or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s
or any Subsidiary’s Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted
Liens” herein.

 

    	 	-13-	 

     

    

 

7.6           Maintenance
of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.8(b) hereof.

 

7.7           Distributions;
Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock;
or (b) directly or indirectly make any Investment (including, without limitation, by the formation of any Subsidiary) other
than Permitted Investments, or permit any of its Subsidiaries to do so.

 

7.8           Transactions
with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower,
except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no
less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person.

 

7.9           Subordinated
Debt. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the subordination, intercreditor,
or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating
to the Subordinated Debt which would increase the amount thereof, provide for earlier or greater principal, interest, or other
payments thereon, or adversely affect the subordination thereof to Obligations owed to Bank.

 

7.10         Compliance.
Become an “investment company” or a company controlled by an “investment company”, under the Investment
Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock
(as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Credit Extension
for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction,
as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation,
if the violation could reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of
its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination
of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.

 

8            EVENTS
OF DEFAULT

 

Any one of the following
shall constitute an event of default (an “Event of Default”) under this Agreement:

 

8.1           Payment
Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension when due, or (b) pay
any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure
period shall not apply to payments due on the Revolving Line Maturity Date). During the cure period, the failure to make or pay
any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure
period);

 

8.2           Covenant
Default. 

 

(a) Borrower fails or neglects
to perform any obligation in Sections 6.2, 6.3(c), 6.5, 6.7, 6.8, 6.9, 6.10(c), 6.12, 6.13 or violates any covenant in Section
7; or

 

    	 	-14-	 

     

    

 

(b) Borrower fails or neglects
to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in this Agreement or any Loan
Documents, and as to any default (other than those specified in this Section 8) under such other term, provision, condition, covenant
or agreement that can be cured, has failed to cure the default within fifteen (15) days after the occurrence thereof; provided,
however, that if the default cannot by its nature be cured within the fifteen (15) day period or cannot after diligent attempts
by Borrower be cured within such fifteen (15) day period, and such default is likely to be cured within a reasonable time, then
Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default,
and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions
shall be made during such cure period). Cure periods provided under this section shall not apply, among other things, to financial
covenants or any other covenants set forth in clause (a) above;

 

8.3           Material
Adverse Change. A Material Adverse Change occurs;

 

8.4           Attachment;
Levy; Restraint on Business. 

 

(a)          (i)
The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under the control
of Borrower (including a Subsidiary), or (ii) a notice of lien or levy is filed against any of Borrower’s assets by any Governmental
Authority, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence thereof, discharged
or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be
made during any ten (10) day cure period; or

 

(b)          
(i) any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver,
or (ii) any court order enjoins, restrains, or prevents Borrower from conducting all or any material part of its business;

 

8.5           Insolvency.
(a) Borrower or any of its Subsidiaries is unable to pay its debts (including trade debts) as they become due or otherwise becomes
insolvent; (b) Borrower or any of its Subsidiaries begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is
begun against Borrower or any of its Subsidiaries and is not dismissed or stayed within thirty (30) days (but no Credit Extensions
shall be made while any of the conditions described in clause (a) exist and/or until any Insolvency Proceeding is dismissed);

 

8.6           Other
Agreements. There is, under any agreement to which Borrower or any guarantor is a party with a third party or parties, (a)
any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness
in an amount individually or in the aggregate in excess of Two Hundred Fifty Thousand Dollars ($250,000.00); or (b) any breach
or default by Borrower or guarantor, the result of which could have a material adverse effect on Borrower’s or any guarantor’s
business;

 

8.7           Judgments;
Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount, individually
or in the aggregate, of at least Fifty Thousand Dollars ($50,000) (not covered by independent third-party insurance as to which
liability has been accepted by such insurance carrier) shall be rendered against Borrower by any Governmental Authority, and the
same are not, within ten (10) days after the entry, assessment or issuance thereof, discharged, satisfied, or paid, or after execution
thereof, stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay (provided
that no Credit Extensions will be made prior to the satisfaction, payment, discharge, stay, or bonding of such fine, penalty, judgment,
order or decree);

 

8.8           Misrepresentations.
Borrower or any Person acting for Borrower makes any representation, warranty, or other statement now or later in this Agreement,
any Loan Document or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such
representation, warranty, or other statement is incorrect in any material respect when made;

 

8.9           Subordinated
Debt. (i) any event of default occurs under the OrbiMed Credit Agreement; or (ii) any document, instrument, or agreement evidencing
any other Subordinated Debt shall for any reason be revoked or invalidated or otherwise cease to be in full force and effect, any
Person shall be in breach thereof or contest in any manner the validity or enforceability thereof or deny that it has any further
liability or obligation thereunder, or the Obligations shall for any reason be subordinated or shall not have the priority contemplated
by this Agreement, the OrbiMed Intercreditor Agreement or any other subordination and/or intercreditor agreement; or

 

    	 	-15-	 

     

    

 

8.10         Governmental
Approvals. Any Governmental Approval shall have been (a) revoked, rescinded, suspended, modified in an adverse manner
or not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority that designates
a hearing with respect to any applications for renewal of any of such Governmental Approval or that could result in the Governmental
Authority taking any of the actions described in clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) cause, or could reasonably be expected to cause, a Material Adverse Change, or (ii) adversely
affects the legal qualifications of Borrower or any of its Subsidiaries to hold such Governmental Approval in any applicable jurisdiction
and such revocation, rescission, suspension, modification or non-renewal could reasonably be expected to affect the status of or
legal qualifications of Borrower or any of its Subsidiaries to hold any Governmental Approval in any other jurisdiction.

 

9            BANK’S
RIGHTS AND REMEDIES

 

9.1           Rights
and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, without notice or demand, do
any or all of the following:

 

(a)          declare
all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);

 

(b)          stop
advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower
and Bank;

 

(c)          demand
that Borrower (i) deposit cash with Bank in an amount equal to at least 105% (110% for Letters of Credit denominated in a currency
other than Dollars), of the Dollar Equivalent of the aggregate face amount of all Letters of Credit remaining undrawn (plus all
interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)),
to secure all of the Obligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings
under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter
of credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit;

 

(d)          terminate
any FX Contracts;

 

(e)          verify
the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, settle or adjust disputes
and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable, and notify any Person
owing Borrower money of Bank’s security interest in such funds;

 

(f)          make
any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the
Collateral. Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises
where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise
any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license
to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies;

 

(g)          apply
to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit
or the account of Borrower;

 

(h)          ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby
granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights,
mask works, rights of use of any name, trade secrets, trade names, Trademarks, and advertising matter, or any similar property
as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection
with Bank’s exercise of its rights under this Section, Borrower’s rights under all licenses and all franchise agreements
inure to Bank’s benefit;

 

    	 	-16-	 

     

    

 

(i)          place
a “hold” on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or
other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral;

 

(j)          demand
and receive possession of Borrower’s Books; and

 

(k)          exercise
all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remedies provided under the
Code (including disposal of the Collateral pursuant to the terms thereof).

 

9.2           Power
of Attorney. Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable upon the occurrence and
during the continuance of an Event of Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or
security; (b) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c)
settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Bank determines
reasonable; (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien,
charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise
take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as the
Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary
to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event of Default
has occurred until all Obligations have been satisfied in full and Bank is under no further obligation to make Credit Extensions
hereunder. Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation
to provide Credit Extensions terminates.

 

9.3           Protective
Payments. If Borrower fails to obtain the insurance called for by Section 6.7 or fails to pay any premium thereon or fails
to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required
to preserve the Collateral, Bank may obtain such insurance or make such payment, and all amounts so paid by Bank are Bank Expenses
and immediately due and payable, bearing interest at the then highest rate applicable to the Obligations, and secured by the Collateral.
Bank will make reasonable efforts to provide Borrower with notice of Bank obtaining such insurance at the time it is obtained or
within a reasonable time thereafter. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s
waiver of any Event of Default.

 

9.4           Application
of Payments and Proceeds. If an Event of Default has occurred and is continuing, Bank shall have the right to apply in any
order any funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection
of Accounts or other disposition of the Collateral, or otherwise, to the Obligations. Bank shall pay any surplus to Borrower by
credit to the Designated Deposit Account or to other Persons legally entitled thereto; Borrower shall remain liable to Bank for
any deficiency. If Bank, directly or indirectly, enters into a deferred payment or other credit transaction with any purchaser
at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal
amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor.

 

9.5           Bank’s
Liability for Collateral. So long as Bank complies with reasonable banking practices regarding the safekeeping of the Collateral
in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral;
(b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier,
warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.

 

    	 	-17-	 

     

    

 

9.6           No
Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict performance by Borrower of any provision
of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to demand strict
performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by the party granting the
waiver and then is only effective for the specific instance and purpose for which it is given. Bank’s rights and remedies
under this Agreement and the other Loan Documents are cumulative. Bank has all rights and remedies provided under the Code, by
law, or in equity. Bank’s exercise of one right or remedy is not an election and shall not preclude Bank from exercising
any other remedy under this Agreement or other remedy available at law or in equity, and Bank’s waiver of any Event of Default
is not a continuing waiver. Bank’s delay in exercising any remedy is not a waiver, election, or acquiescence.

 

9.7           Demand
Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees
held by Bank on which Borrower is liable.

 

10            NOTICES

 

All notices, consents,
requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing
and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business
Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid;
(b) upon transmission, when sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed
to the party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change
its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance with
the terms of this Section 10.

 

    	 	-18-	 

     

    

 

	 	If to Borrower:	c/o Xtant Medical Holdings, Inc.
	 	 	600 Cruiser Lane
	 	 	Belgrade, Montana 59714
	 	 	Attn:  Mr. John Gandolfo, Chief Financial Officer
	 	 	Fax: (406) 388-0480
	 	 	Email:  jgandolfo@xtantmedical.com
	 	 	URL: www.xtantmedical.com
	 	 	 
	 	with a copy to:	Ballard Spahr LLP
	 	 	1 East Washington Street, Suite 2300
	 	 	Phoenix, Arizona 85004-2555
	 	 	Attn: Karen C. McConnell, Esquire
	 	 	Fax: (602) 798-5595
	 	 	E-mail: mcconnelkl@ballardspahr.com
	 	 	 
	 	If to Bank:	Silicon Valley Bank
	 	 	504 Lavaca Street, Suite #1100
	 	 	Austin, Texas 78701
	 	 	Attn: Ms. Priya Iyer
	 	 	Fax: (512) 794-0885
	 	 	Email: piyer@svb.com
	 	 	 
	 	with a copy to:	Riemer & Braunstein LLP
	 	 	Three Center Plaza
	 	 	Boston, Massachusetts 02108
	 	 	Attn:  Charles W. Stavros, Esquire
	 	 	Fax: (617) 880-3456
	 	 	Email: cstavros@riemerlaw.com

 

11            Choice
of Law, Venue AND Jury Trial Waiver

 

Except as otherwise expressly
provided in any of the Loan Documents, New York law governs the Loan Documents without regard to principles of conflicts of law.
Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in New York; provided, however,
that nothing in this Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action in any
other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court
order in favor of Bank. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced
in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper
venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by
such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit
and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to
Borrower at the address set forth in Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier
to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

 

TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT
OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND
ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS
WAIVER WITH ITS COUNSEL.

 

This Section 11 shall survive
the termination of this Agreement.

 

    	 	-19-	 

     

    

 

12            GENERAL
PROVISIONS

 

12.1         Termination
Prior to Revolving Line Maturity Date; Survival. All covenants, representations and warranties made in this Agreement shall
continue in full force until this Agreement has terminated pursuant to its terms and all Obligations have been satisfied. So long
as Borrower has satisfied the Obligations (other than inchoate indemnity obligations, any other obligations which, by their terms,
are to survive the termination of this Agreement, and any Obligations under Bank Services Agreements that are cash collateralized
in accordance with Section 4.1 of this Agreement), this Agreement may be terminated prior to the Revolving Line Maturity Date by
Borrower, effective three (3) Business Days after written notice of termination is given to Bank and following payment of any fees
pursuant to Section 2.5 hereof. Those obligations that are expressly specified in this Agreement as surviving this Agreement’s
termination shall continue to survive notwithstanding this Agreement’s termination.

 

12.2         Successors
and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may
not assign this Agreement or any rights or obligations under it without Bank’s prior written consent (which may be granted
or withheld in Bank’s discretion). Bank has the right, without the consent of or notice to Borrower, to sell, transfer, assign,
negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights, and benefits under
this Agreement and the other Loan Documents.

 

12.3         Indemnification.
Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Bank (each, an “Indemnified Person”) harmless against: (i) all obligations,
demands, claims, and liabilities (collectively, “Claims”) claimed or asserted by any other party in connection
with the transactions contemplated by the Loan Documents; and (ii) all losses or expenses (including Bank Expenses) in any way
suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential to, or arising from transactions
between Bank and Borrower (including reasonable attorneys’ fees and expenses), except for Claims and/or losses directly caused
by such Indemnified Person’s gross negligence or willful misconduct.

 

This Section 12.3 shall
survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity is given shall have
run.

 

12.4         Time
of Essence. Time is of the essence for the performance of all Obligations in this Agreement.

 

12.5         Severability
of Provisions. Each provision of this Agreement is severable from every other provision in determining the enforceability of
any provision.

 

12.6         Correction
of Loan Documents. Bank may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement
of the parties.

 

12.7         Amendments
in Writing; Waiver; Integration. No purported amendment or modification of any Loan Document, or waiver, discharge or termination
of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth
in a writing signed by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing,
no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate
as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document. Any waiver granted shall be
limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether
similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. The Loan Documents
represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents
merge into the Loan Documents.

 

12.8         Counterparts.
This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, is an original, and all taken together, constitute one Agreement.

 

    	 	-20-	 

     

    

 

12.9         Confidentiality.
In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates (such Subsidiaries and Affiliates,
together with Bank, collectively, “Bank Entities”); (b) to prospective transferees or purchasers of any interest
in the Credit Extensions (provided, however, Bank shall use commercially reasonable efforts to obtain any prospective
transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena,
or other order; (d) to Bank’s regulators or as otherwise required in connection with Bank’s examination or audit;
(e) as Bank considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party service providers
of Bank so long as such service providers have executed a confidentiality agreement with Bank with terms no less restrictive than
those contained herein. Confidential information does not include information that is either: (i) in the public domain or
in Bank’s possession when disclosed to Bank, or becomes part of the public domain (other than as a result of its disclosure
by Bank in violation of this Agreement) after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank does
not know that the third party is prohibited from disclosing the information.

 

Bank Entities may use confidential
information for the development of databases, reporting purposes, and market analysis so long as such confidential information
is aggregated and anonymized prior to distribution unless otherwise expressly permitted by Borrower.  The provisions
of the immediately preceding sentence shall survive the termination of this Agreement.

 

12.10         Electronic
Execution of Documents. The words “execution,” “signed,” “signature” and words of like
import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based
recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation,
any state law based on the Uniform Electronic Transactions Act.

 

12.11         Right
of Setoff. Borrower hereby grants to Bank a Lien and a right of setoff as security for all Obligations to Bank, whether now
existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of Bank or any entity under the control of Bank (including a subsidiary of Bank) or in transit
to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Bank
may setoff the same or any part thereof and apply the same to any liability or Obligation of Borrower even though unmatured and
regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF
WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

12.12         Captions.
The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

 

12.13         Construction
of Agreement. The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation
of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the
uncertainty to exist.

 

12.14         Relationship.
The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement. The parties do not
intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different
from those of parties to an arm’s-length contract.

 

12.15         Third
Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies
under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors
and assigns; (b) relieve or discharge the obligation or liability of any person not an express party to this Agreement; or (c)
give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.

 

    	 	-21-	 

     

    

 

12.16         Borrower
Liability. Any Borrower may, acting singly, request Advances hereunder.  Each Borrower hereby appoints each other Borrower
as agent for the other for all purposes hereunder, including with respect to requesting Advances hereunder. Each Borrower hereunder
shall be jointly and severally obligated to repay all Advances made hereunder, regardless of which Borrower actually receives said
Advance, as if each Borrower hereunder directly received all Advances.  Each Borrower waives (a) any suretyship defenses
available to it under the Code or any other applicable law, and (b) any right to require Bank to: (i) proceed against any
Borrower or any other person; (ii) proceed against or exhaust any security; or (iii) pursue any other remedy.  Bank may
exercise or not exercise any right or remedy it has against any Borrower or any security it holds (including the right to foreclose
by judicial or non-judicial sale) without affecting any Borrower’s liability.  Notwithstanding any other provision of
this Agreement or other related document, each Borrower irrevocably waives all rights that it may have at law or in equity (including,
without limitation, any law subrogating Borrower to the rights of Bank under this Agreement) to seek contribution, indemnification
or any other form of reimbursement from any other Borrower, or any other Person now or hereafter primarily or secondarily liable
for any of the Obligations, for any payment made by Borrower with respect to the Obligations in connection with this Agreement
or otherwise and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result
of any payment made by Borrower with respect to the Obligations in connection with this Agreement or otherwise.  Any agreement
providing for indemnification, reimbursement or any other arrangement prohibited under this Section shall be null and void. 
If any payment is made to a Borrower in contravention of this Section, such Borrower shall hold such payment in trust for Bank
and such payment shall be promptly delivered to Bank for application to the Obligations, whether matured or unmatured.

 

13            DEFINITIONS

 

13.1         Definitions.
As used in the Loan Documents, the word “shall” is mandatory, the word “may” is permissive, the word “or”
is not exclusive, the words “includes” and “including” are not limiting, and the singular includes the
plural. As used in this Agreement, the following capitalized terms have the following meanings:

 

“Account”
is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes, without
limitation, all accounts receivable and other sums owing to Borrower.

 

“Account Debtor”
is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.

 

“Advance”
or “Advances” means a revolving credit loan (or revolving credit loans) under the Revolving Line.

 

“Affiliate”
is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls
or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors,
partners and, for any Person that is a limited liability company, that Person’s managers and members.

 

“Agreement”
is defined in the preamble hereof.

 

“Authorized Signer”
is any individual listed in Borrower’s Borrowing Resolution who is authorized to execute the Loan Documents, including any
Advance request, on behalf of Borrower.

 

“Availability
Amount” is (a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base minus (b) the
outstanding principal balance of any Advances.

 

“Bank”
is defined in the preamble hereof.

 

“Bank Entities”
is defined in Section 12.9.

 

“Bank Expenses”
are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, amending,
negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection
with appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower.

 

    	 	-22-	 

     

    

 

“Bank Services” 
are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of
its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services
(including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services),
interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s
various agreements related thereto (each, a “Bank Services Agreement”).

 

“Borrower”
is defined in the preamble hereof.

 

“Borrower’s
Books” are all Borrower’s books and records including ledgers, federal and state tax returns, records regarding
Borrower’s assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or
storage or any equipment containing such information.

 

“Borrowing Base”
is eighty percent (80%) of Eligible Accounts, as determined by Bank from Borrower’s most recent Transaction Report; provided,
however, that Bank has the right to decrease the foregoing percentage in its good faith business judgment to mitigate the
impact of events, conditions, contingencies, or risks which may adversely affect the Collateral or its value.

 

“Borrowing Resolutions”
are, with respect to any Person, those resolutions adopted by such Person’s board of directors (and, if required under the
terms of such Person’s Operating Documents, stockholders) and delivered by such Person to Bank approving the Loan Documents
to which such Person is a party and the transactions contemplated thereby, together with a certificate executed by its secretary
on behalf of such Person certifying (a) such Person has the authority to execute, deliver, and perform its obligations under
each of the Loan Documents to which it is a party, (b) that set forth as a part of or attached as an exhibit to such certificate
is a true, correct, and complete copy of the resolutions then in full force and effect authorizing and ratifying the execution,
delivery, and performance by such Person of the Loan Documents to which it is a party, (c) the name(s) of the Person(s) authorized
to execute the Loan Documents, including any Advance request, on behalf of such Person, together with a sample of the true signature(s)
of such Person(s), and (d) that Bank may conclusively rely on such certificate unless and until such Person shall have delivered
to Bank a further certificate canceling or amending such prior certificate.

 

“Business Day”
is any day that is not a Saturday, Sunday or a day on which Bank is closed.

 

“Cash Equivalents”
means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more
than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s
Investors Service, Inc.; (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue; and (d)
money market funds at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds described
in clauses (a) through (c) of this definition.

 

“Change in Control”
means (a) at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), shall become, or obtain rights (whether by
means or warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5
under the Exchange Act), directly or indirectly, of 25% or more of the ordinary voting power for the election of directors of Borrower
(determined on a fully diluted basis) other than by the sale of Borrower’s equity securities in a public offering or to venture
capital or private equity investors so long as Borrower identifies to Bank the venture capital or private equity investors at least
seven (7) Business Days prior to the closing of the transaction and provides to Bank a description of the material terms of the
transaction; (b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent
governing body of Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body
on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals
referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent
governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals
referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board
or equivalent governing body; (c) at any time, Holdings shall cease to own and control, of record and beneficially, directly or
indirectly, 100% of each class of outstanding capital stock of each subsidiary of its Subsidiaries free and clear of all Liens
(except Liens created by this Agreement).

 

    	 	-23-	 

     

    

 

“Claims”
is defined in Section 12.3.

 

“Code”
is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of New York; provided,
that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently
in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided
further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or
priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect
in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection,
priority, or remedies and for purposes of definitions relating to such provisions.

 

“Collateral”
is any and all properties, rights and assets of Borrower described on Exhibit A.

 

“Collateral Account”
is any Deposit Account, Securities Account, or Commodity Account.

 

“Commodity Account”
is any “commodity account” as defined in the Code with such additions to such term as may hereafter be made.

 

“Compliance Certificate”
is that certain certificate in the form attached hereto as Exhibit B.

 

“Contingent Obligation”
is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed, endorsed,
co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations
for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity
swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include
endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability
for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee
or other support arrangement.

 

“Control Agreement”
is any control agreement entered into among the depository institution at which Borrower maintains a Deposit Account or the securities
intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank
pursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account, Securities Account, or Commodity
Account.

 

“Copyrights”
are any and all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship
and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.

 

“Credit Extension”
is any Advance, any Overadvance, Letter of Credit, FX Contract, amount utilized for cash management services, or any other extension
of credit by Bank for Borrower’s benefit.

 

“Default”
means any event which with notice or passage of time or both, would constitute an Event of Default.

 

“Default Rate”
is defined in Section 2.5(b).

 

“Deferred Revenue”
is all amounts received or invoiced in advance of performance under contracts and not yet recognized as revenue.

 

    	 	-24-	 

     

    

 

“Deposit Account”
is any “deposit account” as defined in the Code with such additions to such term as may hereafter be made.

 

“Designated Deposit
Account” is account number _____________, maintained by Borrower with Bank.

 

“Dollars,”
“dollars” or use of the sign “$” means only lawful money of the United States and not
any other currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily
converted into lawful money of the United States.

 

“Dollar Equivalent”
is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated
in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailing
rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign
Currency.

 

“Effective Date”
is defined in the preamble hereof.

 

“Eligible Accounts”
means Accounts which arise in the ordinary course of Borrower’s business that meet all Borrower’s representations and
warranties in Section 5.3. Bank reserves the right at any time after the Effective Date to adjust any of the criteria set forth
below and to establish new criteria in its good faith business judgment. Unless Bank otherwise agrees in writing, Eligible Accounts
shall not include:

 

(a)          Accounts
for which the Account Debtor is Borrower’s Affiliate, officer, employee, or agent;

 

(b)          Accounts
that the Account Debtor has not paid within ninety (90) days of invoice date regardless of invoice payment period terms;

 

(c)          Accounts
with credit balances over ninety (90) days from invoice date;

 

(d)          Accounts
owing from an Account Debtor if fifty percent (50%) or more of the Accounts owing from such Account Debtor have not been paid within
ninety (90) days of invoice date;

 

(e)          Accounts
owing from an Account Debtor which does not have its principal place of business in the United States;

 

(f)          Accounts
billed from and/or payable to Borrower outside of the United States;

 

(g)          Accounts
owing from an Account Debtor to the extent that Borrower is indebted or obligated in any manner to the Account Debtor (as creditor,
lessor, supplier or otherwise - sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts);

 

(h)          Accounts
owing from an Account Debtor which is a United States government entity or any department, agency, or instrumentality thereof unless
Borrower has assigned its payment rights to Bank and the assignment has been acknowledged under the Federal Assignment of Claims
Act of 1940, as amended;

 

(i)          Accounts
for demonstration or promotional equipment, or in which goods are consigned, or sold on a “sale guaranteed”, “sale
or return”, “sale on approval”, or other terms if Account Debtor’s payment may be conditional;

 

(j)          Accounts
owing from an Account Debtor where goods or services have not yet been rendered to the Account Debtor (sometimes called memo billings
or pre-billings);

 

(k)          Accounts
subject to contractual arrangements between Borrower and an Account Debtor where payments shall be scheduled or due according to
completion or fulfillment requirements where the Account Debtor has a right of offset for damages suffered as a result of Borrower’s
failure to perform in accordance with the contract (sometimes called contracts accounts receivable, progress billings, milestone
billings, or fulfillment contracts);

 

    	 	-25-	 

     

    

 

(l)          Accounts
owing from an Account Debtor the amount of which may be subject to withholding based on the Account Debtor’s satisfaction
of Borrower’s complete performance (but only to the extent of the amount withheld; sometimes called retainage billings);

 

(m)          Accounts
subject to trust provisions, subrogation rights of a bonding company, or a statutory trust;

 

(n)          Accounts
owing from an Account Debtor that has been invoiced for goods that have not been shipped to the Account Debtor unless Bank, Borrower,
and the Account Debtor have entered into an agreement acceptable to Bank wherein the Account Debtor acknowledges that (i) it has
title to and has ownership of the goods wherever located, (ii) a bona fide sale of the goods has occurred, and (iii) it owes payment
for such goods in accordance with invoices from Borrower (sometimes called “bill and hold” accounts);

 

(o)          Accounts
for which the Account Debtor has not been invoiced;

 

(p)          Accounts
that represent non-trade receivables or that are derived by means other than in the ordinary course of Borrower’s business;

 

(q)          Accounts
for which Borrower has permitted Account Debtor’s payment to extend beyond ninety (90) days;

 

(r)          Accounts
arising from chargebacks, debit memos or other payment deductions taken by an Account Debtor;

 

(s)          Accounts
arising from product returns and/or exchanges (sometimes called “warranty” or “RMA” accounts);

 

(t)          Accounts
in which the Account Debtor disputes liability or makes any claim (but only up to the disputed or claimed amount), or if the Account
Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business;

 

(u)          Accounts
owing from an Account Debtor with respect to which Borrower has received Deferred Revenue (but only to the extent of such Deferred
Revenue);

 

(v)         Accounts
owing from an Account Debtor, whose total obligations to Borrower exceed twenty-five percent (25%) of all Accounts, for the amounts
that exceed that percentage, unless Bank approves in writing; and

 

(w)          Accounts
for which Bank in its good faith business judgment determines collection to be doubtful, including, without limitation, accounts
represented by “refreshed” or “recycled” invoices.

 

“Equipment”
is all “equipment” as defined in the Code with such additions to such term as may hereafter be made, and includes without
limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.

 

“ERISA”
is the Employee Retirement Income Security Act of 1974, and its regulations.

 

“Event of Default”
is defined in Section 8.

 

“Exchange Act”
is the Securities Exchange Act of 1934, as amended.

 

“First Anniversary”
is the date that is 364 days after the Effective Date.

 

    	 	-26-	 

     

    

 

“Foreign Currency”
means lawful money of a country other than the United States.

 

“Funding Date”
is any date on which a Credit Extension is made to or for the account of Borrower which shall be a Business Day.

 

“FX Contract”
is any foreign exchange contract by and between Borrower and Bank under which Borrower commits to purchase from or sell to Bank
a specific amount of Foreign Currency on a specified date.

 

“GAAP”
is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination.

 

“General Intangibles”
is all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as
may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security
and other deposits, payment intangibles, contract rights, options to purchase or sell real or personal property, rights in all
litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation
key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.

 

“Governmental
Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration,
filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.

 

“Governmental
Authority” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange and any self-regulatory organization.

 

“Indebtedness”
is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations
for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital
lease obligations, and (d) Contingent Obligations.

 

“Indemnified Person”
is defined in Section 12.3.

 

“Initial Audit”
is Bank’s inspection of Borrower’s Accounts, the Collateral, and Borrower’s Books, with results satisfactory
to Bank in its sole and absolute discretion.

 

“Insolvency Proceeding”
is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.

 

“Intellectual
Property” means, with respect to any Person, means all of such Person’s right, title, and interest in and to the
following:

 

(a)          its
Copyrights, Trademarks and Patents;

 

(b)          any
and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how and
operating manuals;

 

(c)          any
and all source code;

 

(d)          any
and all design rights which may be available to such Person;

 

    	 	-27-	 

     

    

 

(e)          any
and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above;
and

 

(f)          all
amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.

 

“Inventory”
is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter
be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work
in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody
or possession or in transit and including any returned goods and any documents of title representing any of the above.

 

“Investment”
is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance
or capital contribution to any Person.

 

“IP Agreement”
is that certain Intellectual Property Security Agreement executed and delivered by Borrower to Bank dated as of the Effective Date,
as the same may be amended, amended and restated, modified and/or supplemented from time to time.

 

“Key Person”
is each of Borrower’s (a) Chief Executive Officer, who is David Goldberger as of the Effective Date, and (b) Chief
Financial Officer, who is John Gandolfo as of the Effective Date.

 

“Letter of Credit”
is a standby or commercial letter of credit issued by Bank upon request of Borrower based upon an application, guarantee, indemnity,
or similar agreement.

 

“Lien”
is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily
incurred or arising by operation of law or otherwise against any property.

 

“Loan Documents”
are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other documents related to this Agreement,
the IP Agreement, the OrbiMed Intercreditor Agreement, any Bank Services Agreement, any subordination agreement, any note, or notes
or guaranties executed by Borrower or any Guarantor, and any other present or future agreement by Borrower and/or any guarantor
with or for the benefit of Bank in connection with this Agreement or Bank Services, all as amended, restated, or otherwise modified.

 

“Material Adverse
Change” is (a) a material impairment in the perfection or priority of Bank’s Lien in the Collateral or in the value
of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower;
or (c) a material adverse change in the ability of the Borrower to repay the Obligations.

 

“Minimum Revenue”
means, with respect to each product of Borrower, the gross invoiced amount on sales of, and distribution income, stocking orders,
transfer payments and other consideration received, directly or indirectly, by Borrower and its Subsidiaries in respect of any
such product in any applicable territory from any Account Debtor after deduction of: (i) normal and customary trade, quantity or
prompt settlement discounts (including chargebacks, shelf stock adjustments and allowances) with respect to customers actually
allowed; (ii) amounts repaid or credited by reason of rejection, returns or recalls of goods, rebates or bona fide price reductions;
(iii) rebates and similar payments actually made with respect to sales paid for by Federal or state Medicaid, Medicare or similar
programs in the territory; and (iv) excise taxes, customs duties, customs levies and import fees imposed on the sale, importation,
use or distribution of such product (to the extent included in the gross invoiced amount), in each case as calculated (x) in a
manner consistent with the Borrower’s customary practice for its products and (y) consistent with GAAP.

 

“Monthly Financial
Statements” is defined in Section 6.2(c).

 

    	 	-28-	 

     

    

 

“Obligations”
are Borrower’s obligations to pay when due any debts, principal, interest, fees, Bank Expenses, and other amounts Borrower
owes Bank now or later, whether under this Agreement, the other Loan Documents, or otherwise, including, without limitation, all
obligations relating to Letters of Credit (including reimbursement obligations for drawn and undrawn Letters of Credit), cash management
services, and foreign exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin and debts,
liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents.

 

“Operating Documents”
are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent agency) of
such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective Date,
and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company,
its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement
(or similar agreement), each of the foregoing with all current amendments or modifications thereto.

 

“OrbiMed”
means, individually and collectively, each of (i) ROS Acquisition Offshore, L.P., a Cayman Islands exempted limited partnership
and (ii) OrbiMed Royalty Opportunities II, L.P., a Delaware limited partnership.

 

“OrbiMed Intercreditor
Agreement” is that certain Intercreditor Agreement, dated as of the Effective Date, by and between OrbiMed and Bank,
as the same may be amended, amended and restated, modified and/or supplemented from time to time.

 

“OrbiMed Credit
Agreement” is that certain Amended and Restated Credit Agreement, dated as of July 27, 2015, by and between Borrower
and OrbiMed, as the same may be amended, amended and restated, modified and/or supplemented from time to time, in each case to
the extent permitted under the OrbiMed Intercreditor Agreement.

 

“OrbiMed Loan
Documents” is the OrbiMed Credit Agreement, together with each other document and/or agreement executed and/or delivered
in connection therewith, as the same may be amended, amended and restated, modified and/or supplemented from time to time, in each
case to the extent permitted under the OrbiMed Intercreditor Agreement.

 

“Overadvance”
is defined in Section 2.2.

 

“Patents”
means all patents, patent applications and like protections including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same.

 

“Perfection Certificate”
is defined in Section 5.1.

 

“Permitted Indebtedness”
is:

 

(a)          Borrower’s
Indebtedness to Bank under this Agreement and the other Loan Documents;

 

(b)          Indebtedness
existing on the Effective Date and shown on the Perfection Certificate;

 

(c)          Indebtedness
owed to OrbiMed and subject to the OrbiMed Intercreditor Agreement;

 

(d)          unsecured
Indebtedness to trade creditors incurred in the ordinary course of business;

 

(e)          Indebtedness
incurred as a result of endorsing negotiable instruments received in the ordinary course of business;

 

(f)          Indebtedness
secured by Liens permitted under clauses (a) and (c) of the definition of “Permitted Liens” hereunder;

 

    	 	-29-	 

     

    

 

(g)          Indebtedness
of Borrower to any other Borrower; and

 

(h)          extensions,
refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (g) above; provided
that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms
upon Borrower or its Subsidiary, as the case may be.

 

“Permitted Investments”
are:

 

(a)          Investments
(including, without limitation, Subsidiaries) existing on the Effective Date and shown on the Perfection Certificate;

 

(b)          Investments
consisting of Cash Equivalents;

 

(c)          Investments
consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course
of Borrower;

 

(d)          Investments
consisting of deposit accounts in which Bank has a perfected security interest; and

 

(e)          Investments
accepted in connection with Transfers permitted by Section 7.1.

 

“Permitted Liens”
are:

 

(a)          Liens
existing on the Effective Date and shown on the Perfection Certificate or arising under this Agreement and the other Loan Documents;

 

(b)          Liens
for taxes, fees, assessments or other government charges or levies, either (i) not due and payable or (ii) being contested
in good faith and for which Borrower maintains adequate reserves on its Books, provided that no notice of any such Lien
has been filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted thereunder;

 

(c)          purchase
money Liens securing no more than One Million Dollars ($1,000,000.00) in the aggregate amount outstanding (i) on Equipment acquired
or held by Borrower incurred for financing the acquisition of the Equipment, or (ii) existing on Equipment when acquired, if
the Lien is confined to the property and improvements and the proceeds of the Equipment;

 

(d)          Liens
in favor of OrbiMed to the extent subject to the OrbiMed Intercreditor Agreement;

 

(e)          Liens
to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations
incurred in the ordinary course of business (other than Liens imposed by ERISA);

 

(f)          Liens
incurred in the extension, renewal or refinancing of the Indebtedness secured by Liens described in (a) through (c), but
any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount
of the indebtedness may not increase;

 

(g)          leases
or subleases of real property granted in the ordinary course of Borrower’s business (or, if referring to another Person,
in the ordinary course of such Person’s business), and leases, subleases, non-exclusive licenses or sublicenses of personal
property (other than Intellectual Property) granted in the ordinary course of Borrower’s business (or, if referring to another
Person, in the ordinary course of such Person’s business), if the leases, subleases, licenses and sublicenses do not
prohibit granting Bank a security interest therein;

 

(h)          non-exclusive
license of Intellectual Property granted to third parties in the ordinary course of business; and

 

    	 	-30-	 

     

    

 

(i)          Liens
arising from attachments or judgments, orders, or decrees in circumstances not constituting an Event of Default under Sections
8.4 and 8.7.

 

“Person”
is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.

 

“Prime Rate”
is the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successor
publication thereto as the “prime rate” then in effect; provided that if such rate of interest, as set forth from time
to time in the money rates section of The Wall Street Journal, becomes unavailable for any reason as determined by Bank, the “Prime
Rate” shall mean the rate of interest per annum announced by Bank as its prime rate in effect at its principal office in
the State of California (such Bank announced Prime Rate not being intended to be the lowest rate of interest charged by Bank in
connection with extensions of credit to debtors).

 

“Registered Organization”
is any “registered organization” as defined in the Code with such additions to such term as may hereafter be made.

 

“Requirement of
Law” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common),
treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

“Reserves”
means, as of any date of determination, such amounts as Bank may from time to time establish and revise in its good faith business
judgment, reducing the amount of Advances and other financial accommodations which would otherwise be available to Borrower (a)
to reflect events, conditions, contingencies or risks which, as determined by Bank in its good faith business judgment, do or may
adversely affect (i) the Collateral or any other property which is security for the Obligations or its value (including without
limitation any increase in delinquencies of Accounts), (ii) the assets, business or prospects of Borrower or any guarantor, or
(iii) the security interests and other rights of Bank in the Collateral (including the enforceability, perfection and priority
thereof); or (b) to reflect Bank’s reasonable belief that any collateral report or financial information furnished by or
on behalf of Borrower or any guarantor to Bank is or may have been incomplete, inaccurate or misleading in any material respect;
or (c) in respect of any state of facts which Bank determines constitutes an Event of Default or may, with notice or passage
of time or both, constitute an Event of Default.

 

“Responsible Officer”
is any of the Chief Executive Officer, President, Chief Financial Officer and VP of Finance of Borrower.

 

“Restricted License”
is any material license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise
restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property,
or (b) for which a default under or termination of could interfere with the Bank’s right to sell any Collateral.

 

“Revolving Line”
is an aggregate principal amount not to exceed Six Million Dollars ($6,000,000.00) outstanding at any time.

 

“Revolving Line
Maturity Date” is May 25, 2019 (three (3) years after the Effective Date).

 

“SEC”
shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.

 

“Second Anniversary”
is the date that is 364 days after the First Anniversary.

 

“Securities Account”
is any “securities account” as defined in the Code with such additions to such term as may hereafter be made.

 

    	 	-31-	 

     

    

 

“Streamline Period”
is, on and after the Effective Date, provided no Event of Default has occurred and is continuing, the period (a) commencing on
the first day of the month following the day that Borrower provides to Bank a written report that Borrower has, for each consecutive
day in the immediately preceding fiscal quarter, unrestricted cash at Bank, as determined by Bank in its reasonable discretion,
in an amount at all times greater than Three Million Dollars ($3,000,000.00) (the “Streamline Balance”); and
(b) terminating on the earlier to occur of (i) the occurrence of an Event of Default, and (ii) the first day thereafter in
which Borrower fails to maintain the Streamline Balance, as determined by Bank in its discretion. Upon the termination of a Streamline
Period, Borrower must maintain the Streamline Balance each consecutive day for one (1) fiscal quarter as determined by Bank in
its reasonable discretion, prior to entering into a subsequent Streamline Period. Borrower shall give Bank prior written notice
of Borrower’s election to enter into any such Streamline Period, and each such Streamline Period shall commence on the first
day of the monthly period following the date the Bank determines, in its reasonable discretion, that the Streamline Balance has
been achieved.

 

“Subordinated
Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now or hereafter indebtedness to Bank
(pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into
between Bank and the other creditor), on terms acceptable to Bank.

 

“Subsidiary”
is, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of
the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership
or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or
more intermediaries, or both, by such Person. Unless the context otherwise requires, each reference to a Subsidiary herein shall
be a reference to a Subsidiary of Borrower.

 

“Trademarks”
means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.

 

“Transaction Report”
is that certain report of transactions and schedule of collections in the form provided by Bank to Borrower.

 

“Transfer”
is defined in Section 7.1.

 

[Signature page follows.]

 

    	 	-32-	 

     

    

 

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed as of the Effective Date.

 

BORROWER:

 

	XTANT MEDICAL HOLDINGS, INC.	 	BACTERIN INTERNATIONAL, INC.
	 	 	 
	By	  /s/ John P. Gandolfo	 	By	/s/ John P. Gandolfo
	Name: John P. Gandolfo	 	Name: John P. Gandolfo
	Title:  CFO	 	Title:  CFO
	 	 	 
	X-SPINE SYSTEMS, INC.	 	XTANT MEDICAL, INC.
	 	 	 
	By	/s/ Daniel Goldberger 	 	By	/s/ Daniel Goldberger 
	Name: Daniel Goldberger	 	Name: Daniel Goldberger
	Title:  CEO	 	Title:  CEO

 

	BANK:	 
	 	 
	SILICON VALLEY BANK	 
	 	 
	By	/s/ Priya Iyer	 
	Name: Priya Iyer	 
	Title: Director	 
	 	 	 

 

    	 	1	 

     

    

 

EXHIBIT A –
COLLATERAL DESCRIPTION

 

The Collateral consists
of all of Borrower’s right, title and interest in and to the following personal property:

 

All goods, Accounts (including
health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise
agreements, General Intangibles, commercial tort claims, documents, instruments (including any promissory notes), chattel paper
(whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit rights (whether or not the letter of credit
is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether
now owned or hereafter acquired, wherever located; and

 

all Borrower’s Books
relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or
all of the foregoing.

 

    	 	2	 

     

    

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

	TO:	SILICON VALLEY BANK	Date:   	 
	FROM:	XTANT MEDICAL HOLDINGS, INC.	 	 
	 	BACTERIN INTERNATIONAL, INC.	 	 
	 	X-SPINE SYSTEMS, INC.	 	 
	 	XTANT MEDICAL, INC.	 	 

 

The undersigned authorized officer of XTANT
MEDICAL HOLDINGS, INC., a Delaware corporation (“Holdings”), BACTERIN INTERNATIONAL, INC., a Nevada
corporation (“Bacterin”), X-SPINE SYSTEMS, INC., an Ohio corporation (“X-spine”),
and XTANT MEDICAL, INC., a Delaware corporation (“Xtant”, and together with Holdings, Bacterin and X-spine,
individually and collectively, jointly and severally, the “Borrower”) certifies that under the terms and conditions
of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is in complete
compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of
Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date
except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that
those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material
respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower
except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims
made against Borrower or any of its Subsidiaries, if any, relating to unpaid employee payroll or benefits of which Borrower has
not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned
certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained
in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not
just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings
given them in the Agreement.

 

Please indicate compliance status by circling
Yes/No under “Complies” column.

 

	Reporting Covenant	 	Required	 	Complies
	 	 	 	 	 
	Monthly financial statements with 

Compliance Certificate	 	Monthly within 30 days	 	Yes No
	Annual financial statement (CPA Audited) + CC	 	FYE within 180 days	 	Yes No
	10-Q, 10-K and 8-K	 	Within 5 days after filing with SEC	 	Yes No
	A/R & A/P Agings, Deferred Revenue reports	 	Monthly within 30 days	 	Yes No
	Transaction Reports	 	(i) with each request for an Advance, (ii) on the 15th (or the immediately preceding Business Day if the 15th is not a Business Day) and the last Business Day of each month when a Streamline Period is not in effect, and (iii) within thirty (30) days after the end of each month when a Streamline Period is in effect	 	Yes No
	Projections	 	Within 30 days of Board approval, but in any event on or before January 31, and as amended/updated	 	Yes No

 

    	 	1	 

     

    

 

The following Intellectual Property was registered
after the Effective Date (if no registrations, state “None”)

____________________________________________________________________________

 

	Financial
    Covenant	 	Required	 	Actual	 	Complies
	 	 	 	 	 	 	 
	Maintain as indicated:	 	 	 	 	 	 
	Minimum Revenue (quarterly)	 	*	 	$                	 	Yes No

 

* See Section 6.9(a)

 

	STREAMLINE PERIOD	 	Applies
	 	 	 	 	 
	Minimum Unrestricted Cash at SVB > $3,000,000.00
    at all times in prior fiscal quarter	 	Prime + 0.25%	 	Yes No
	Minimum Unrestricted Cash at SVB < $3,000,000.00 at any time	 	Prime + 1.00%	 	Yes No

 

The following financial
covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions
with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

 

—————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————————

 

	Xtant Medical Holdings, Inc., for itself and on behalf of each other “Borrower”	 	BANK USE ONLY
	 	 	 
	By:	 	 	Received by:	 
	Name:	 	 	authorized signer
	Title:	 	 	Date:	 
	 	 	 
	 	 	Verified:	 
	 	 	authorized signer
	 	 	Date:	 
	 	 	 
	 	 	Compliance Status:      Yes No

 

    	 	1	 

     

    

 

SCHEDULE 1 TO COMPLIANCE CERTIFICATE

 

Financial
Covenants of Borrower

 

In the event of a conflict between this Schedule
and the Loan Agreement, the terms of the Loan Agreement shall govern.

 

	Dated:	 	 

 

I.           Minimum
Revenue (Section 6.9(a))

 

Required:Achieve Minimum
Revenue in an amount equal to or greater than the amount specified below for each quarterly period indicated below:

 

	Quarterly Period Ending	 	Minimum Revenue	 
	 	 	 	 
	June 30, 2016	 	$	18,000,000.00	 
	 	 	 	 	 
	September 30, 2016, December 31, 2016, March 31, 2017 and June 30, 2017	 	$	20,000,000.00	 
	 	 	 	 	 
	September 30, 2017, and each quarterly period ending thereafter	 	$	22,000,000.00	 

 

“Minimum Revenue” means,
with respect to each product of Borrower, the gross invoiced amount on sales of, and distribution income, stocking orders, transfer
payments and other consideration received, directly or indirectly, by Borrower and its Subsidiaries in respect of any such product
in any applicable territory from any Account Debtor after deduction of: (i) normal and customary trade, quantity or prompt settlement
discounts (including chargebacks, shelf stock adjustments and allowances) with respect to customers actually allowed; (ii) amounts
repaid or credited by reason of rejection, returns or recalls of goods, rebates or bona fide price reductions; (iii) rebates and
similar payments actually made with respect to sales paid for by Federal or state Medicaid, Medicare or similar programs in the
territory; and (iv) excise taxes, customs duties, customs levies and import fees imposed on the sale, importation, use or distribution
of such product (to the extent included in the gross invoiced amount), in each case as calculated (x) in a manner consistent with
the Borrower’s customary practice for its products and (y) consistent with GAAP.

 

Actual:

 

	A.	Quarterly Minimum Revenue (determined in accordance with GAAP)	$                                   

 

Is line A equal to or greater than $[                                                       ]?

 

    	 	2

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