TENTH MODIFICATION TO LOAN AND SECURITY AGREEMENT

 
This Tenth Modification to Loan and Security Agreement (this “Modification”) is
entered into by and between Spy Optic Inc., a(n) California corporation
(“Borrower”) and BFI Business Finance, a California corporation (“Lender”) as of
this 6th day of June, 2014, at Campbell, California.
 
RECITALS
 
A. Lender and Borrower have previously entered into or are concurrently herewith
entering into a Loan and Security Agreement (the “Agreement”) dated February 26,
2007.
 
B. Lender and Borrower may have previously executed one or more Modifications to
Loan and Security Agreement (the "Previous Modification(s)").
 
C. Borrower has requested, and Lender has agreed, to modify the Agreement as set
forth below.
 
AGREEMENT
 
For good and valuable consideration, the parties agree as set forth below:
 
1. Incorporation by Reference.  The Agreement and the Previous Modification(s),
if any, as modified hereby and the Recitals are incorporated herein by this
reference.
 
2. Effective Date.  The terms of this Modification shall be in full force and
effect upon Borrower's execution of the same and Lender's signing of the
acknowledgment of receipt below.
 
3. Modification to Agreement.  The Agreement is hereby modified as follows:
 
a. The following definition(s) as set forth in “Section 1.1 Definitions.”
is(are) hereby amended and restated in its(their) entirety as set forth below:
 
“Maximum Account Advance” means Eight Million and 00/100 Dollars
($8,000,000.00).
 
“Maximum Amount” means Eight Million and 00/100 Dollars ($8,000,000.00).
 
““Maximum Inventory Advance” means the lesser of Three Million Five Hundred
Thousand and 00/100 Dollars ($3,500,000.00) or Sixty-Five percent (65%) of the A
R Borrowing Base.”
 
b. The following definition(s) as set forth in “Section 1.1 Definitions.” is
(are) hereby partially amended and restated as set forth below (with the
remainder of such definition(s) to remain unchanged):
 
““Borrowing Base” (b) Sixty-Five percent (65%) of the Current Market Cost of raw
materials that constitute Eligible Inventory; plus Sixty-Five percent (65%) of
the Current Market Cost of finished goods that constitute Eligible Inventory,
but in any event not in an aggregate amount in excess of the Maximum Inventory
Advance (the “Inventory Borrowing Base”).”
 
4. Fee.  At the time of execution of the Modification, Borrower agrees to pay a
one-time fee in the amount of ----------N/A---------- and 00/100 Dollars
($----------n/a----------).
 
 
 

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5. Legal Effect.  Except as specifically set forth in this Modification, all of
the terms and conditions of the Agreement remain in full force and effect.

6. Counterparts.  This Modification may be executed in any number of
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute a single original.
 
7. Electronic Signature.  This Modification, or a signature page thereto
intended to be attached to a copy of this Modification, signed and transmitted
by facsimile machine, telecopier or other electronic means (including via
transmittal of a “pdf” file) shall be deemed and treated as an original
document.  The signature of any person thereon, for purposes hereof, is to be
considered as an original signature, and the document transmitted is to be
considered to have the same binding effect as an original signature on an
original document.  At the request of any party hereto, any facsimile, telecopy
or other electronic document is to be re-executed in original form by the
persons who executed the facsimile, telecopy of other electronic document.  No
party hereto may raise the use of a facsimile machine, telecopier or other
electronic means or the fact that any signature was transmitted through the use
of a facsimile machine, telecopier or other electronic means as a defense to the
enforcement of this Modification.
 
8. Integration.  This is an integrated Modification and supersedes all prior
negotiations and agreements regarding the subject matter hereof.  All amendments
hereto must be in writing and signed by the parties.
 
IN WITNESS WHEREOF, the parties have executed this Tenth Modification to Loan
and Security Agreement as of the date first set forth above.
 
BFI Business Finance
 
 
Spy Optic Inc.
 
/s/ Stephen P. Darlington   /s/ James McGinty
By:  Stephen P. Darlington
Its: Vice President
 
By:  James McGinty
Its: CFO